SKF stock climbs on profits surprise

Sweden's SKF, the world's biggest maker of industrial bearings, has reported a second quarter profit ahead of analyst forecasts, with stock markets responding positively to the news on Tuesday morning.

SKF stock climbs on profits surprise

The firm explained that higher than expected demand lay behind the boost.

“SKF delivered a good performance and a strong cash flow. Demand was somewhat better in the quarter than we expected in April and this combined with the steps we are taking to reduce our costs enabled us to continue our journey to deliver a sequentially improving operating margin,” CEO Tom Johnstone said in a statement.

SKF reported a pre-tax profit of 1.63 billion kronor ($245 million), down on the 17.17 billion kronor reported in the corresponding period of 2012. The report was received positively by the stock market with SKF stock climbing 2.6 percent in early trading on Tuesday.

Johnstone forecast that demand would be sustained at current levels in the third quarter.

“While there continues to be uncertainty from a macro viewpoint we expect demand in the third quarter to remain on the same level which means it will be slightly higher compared to the same quarter last year.”

“The manufacturing level was increased during the second quarter and we will stay at that level in the third quarter,” he added.

The firm reported an operating margin of 11.2 percent for the quarter and aims to continue its cost-cutting drive. The firm said it expected currency fluctuations to impact negatively on operating profit, by 100 million kronor in the second quarter and by 450 million over the full year.

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Swedish banking giants report mixed fortunes

Swedish bank Nordea on Thursday posted falling profits in the second quarter while competitor Handelsbanken announced growing figures for the same period.

Swedish banking giants report mixed fortunes
Handelsbanken CEO Pär Boman. File photo: TT

Nordea's net profit fell by 11 percent to €686 million ($928 million), compared to €771 million a year earlier.

"Interest rates continue to come down and the general level of economic activity as well as volatility is low," Nordea chief executive Christian Clausen said in a statement.

"We have seen continued strong activity in our savings area and in the corporate advisory business."

Revenue was almost stable at €1.368 billion, compared to €1.391 billion for the same period last year.

"Low loan growth and interest rates also put pressure on our net interest income," Clausen said.

The bank said that its cost-cutting plan was "progressing as planned" and that it expects to see the results by the end of 2014 and onwards.

Nordea said it has saved €300 million since the launch of the cost-reduction measures at the beginning 2013.

The second quarter looked better for Handelsbanken, which posted profits increasing by 9.0 percent compared to a year earlier to 4.034 billion kronor ($590 million).

Revenue reached 6.704 billion kronor, slightly above the 6.653 billion kronor the bank posted in the same period of 2013.

The loan loss ratio was 0.07 percent, the same as last year.

Handelsbanken is Sweden's largest bank in terms of deposits.

Between April and June, its liquidity reserves stayed above 800 billion kronor, as the bank continued its expansion in the British market.

"The bank has decided to establish a fifth regional bank in the UK, with its head office in Leeds," Handelsbanken said in a statement, adding that this would start in the first quarter of 2015.